In recent years, policy support for Traditional Chinese Medicine (TCM) has continued to strengthen. A series of top-level design documents have been successively issued, including "Opinions on Promoting the Inheritance, Innovation and Development of Traditional Chinese Medicine," "Several Policy Measures on Accelerating the Distinctive Development of Traditional Chinese Medicine," "The 14th Five-Year Plan for Traditional Chinese Medicine Development," and "Implementation Plan for Major Projects for the Revitalization and Development of Traditional Chinese Medicine." These policies are comprehensively reshaping the domestic TCM development landscape, covering areas from payment reimbursement to industrial development, from quality supervision to technological innovation. In March this year, "Opinions on Enhancing Traditional Chinese Medicine Quality and Promoting High-Quality Development of the TCM Industry" issued by the State Council further clarified core tasks including promoting full-chain quality traceability, intelligent transformation, and technological innovation, bringing structural upgrade opportunities to the entire TCM industry.
Against this backdrop, as a pharmaceutical company with abundant cash, strong profitability, and vigorous innovation transformation, CONSUN PHARMA (01681) has seen its intrinsic value continuously explored by the market in recent years. Following a cumulative stock price increase of 119.89% in 2024, CONSUN PHARMA's stock price has continued to rise steadily. As of August 22, the company's year-to-date cumulative stock price gain reached 85.99%.
While the rising stock price has boosted investment returns for secondary market investors, CONSUN PHARMA has continued to reward investors with "real money" through "high dividends + share buybacks + continuous management shareholding increases," boosting market confidence. Benefiting from positive secondary market feedback, CONSUN PHARMA's stock price has recently continued to hit new highs since listing. As of August 22, the company's market value reached HK$12.448 billion, successfully crossing the "Stock Connect threshold" at the market cap level, with great potential to be included in the Stock Connect list after the next Hong Kong Stock Connect adjustment review period ends.
Based on historical market trading and recent rebound trends in the Hong Kong pharmaceutical sector, CONSUN PHARMA's stock price is expected to continue rising with increased mainland capital inflows once it enters Stock Connect. Combined with the company's latest disclosed solid interim results, it may have reached a key "sweet spot" for positioning in this company.
**Fundamentals Remain Solid, Maintaining Stable High Dividend Distribution**
Driven by its core product Uremic Clearance Granules, CONSUN PHARMA maintained steady business growth momentum in the first half of 2025. During the reporting period, the company achieved operating revenue of RMB 1.569 billion, up 23.7% year-on-year; gross profit of RMB 1.209 billion, up 27.6% year-on-year; gross margin of 77.1%; and corresponding net profit attributable to shareholders of RMB 498 million, up 24.6% year-on-year. Meanwhile, the company achieved basic earnings per share of RMB 0.59, up 18.0% year-on-year. Additionally, the company declared an interim dividend of HK$0.33 per share for 2025, with a payout ratio exceeding 51%.
In peer comparison, as of August 22, 26 companies in A-shares and 7 companies in Hong Kong had formally disclosed their 2025 interim report data. Among them, 15 A-share companies and 5 Hong Kong companies achieved positive year-on-year growth in net profit attributable to shareholders, continuing the performance differentiation trend since 2024. Compared to companies in both A-share and Hong Kong markets, CONSUN PHARMA's revenue growth rate, net profit attributable to shareholders growth rate, gross margin, and net margin were all above peer median levels during the period, while the company's ROE level was also well above the median level of peer companies in both markets.
However, as of August 22, the company's current P/E ratio (TTM) was only 11.47x. Compared to other companies in the Hong Kong TCM sector, CONSUN PHARMA ranked first in ROE indicators but only eighth in P/E valuation performance. While above the median level, it remained far below the average level of 23.40x.
**"Major Shareholder Increases + Continuous Buybacks" Boost Market Confidence**
To signal to the market that the company's stock price is undervalued, CONSUN PHARMA has rewarded shareholders with "real money" through major shareholder increases and continuous buybacks this year, restoring market confidence. In July this year, CONSUN PHARMA received continuous increases from major shareholder and Chairman An Meng, who increased holdings on July 10, 11, 15, and 17 for four consecutive times, accumulating 464,000 shares with a total purchase amount of HK$5.3271 million.
Additionally, CONSUN PHARMA's Board of Directors announced on June 13 that the company would use up to HK$200 million for share buybacks in the secondary market. From June 16 to date, CONSUN PHARMA has cumulatively conducted 18 buybacks, repurchasing 5.195 million shares with a cumulative amount of HK$58.5311 million.
Under the incentive of the company's steady performance growth and "high dividends + share buybacks + continuous management increases" strategy, CONSUN PHARMA has clearly gained capital favor in the secondary market this year, with significant stock price gains. On August 19, after disclosing its 2025 interim report, CONSUN PHARMA's stock price surged in the afternoon, touching HK$14.95 intraday and hitting a new high since listing. Looking at the extended timeline, the company's stock price has accumulated gains of over 80% year-to-date.
**Stock Connect Inclusion Expectations Continue to Rise**
Continued increases in stock price and market value have brought CONSUN PHARMA closer to Stock Connect inclusion. According to established Hong Kong Stock Connect logic, the Hang Seng Composite Index conducts regular reviews at two fixed time points each year - June 30 and December 31. Latest data shows that as of August 22, 2025, Hong Kong-listed companies need an average daily market capitalization threshold of approximately HK$90.47 billion during the review period to enter Stock Connect.
According to calculations, CONSUN PHARMA's current average daily market value in Hong Kong stocks for the review period ending in December this year is HK$99.29 billion, already above the current "Stock Connect threshold," and monthly stock liquidity fully meets standards. Therefore, the company has a high probability of being included in the Stock Connect list in the regular review at the end of December this year.
Taking last December's regular review results as an example, the 22 newly included stocks saw trading volumes surge 439% on March 4 compared to before inclusion (average daily trading volume from early 2024 to March 1, 2024). Among them, high-quality pharmaceutical sector enterprises such as WuXi Advanced Therapies and Collen Biotechology-B led in stock price gains with significantly increased trading volumes, with CICC Info (Shanghai-Hong Kong Stock Connect) and Ying Services (Shenzhen-Hong Kong Stock Connect) as major buyers, indirectly confirming the important role of Stock Connect in improving liquidity.
Therefore, as another high-quality enterprise in the Hong Kong pharmaceutical sector, CONSUN PHARMA can similarly expect improved stock liquidity after successfully entering Stock Connect.
**"1+6" Multi-Specialty Strategy Continues Strong Performance, Significant Innovation Transformation Results**
In the first half of this year, CONSUN PHARMA's "1+6" multi-specialty strategy continued to perform strongly. As an important pillar of the company's steady growth, the nephrology segment continued to play a crucial role in stabilizing company performance, recording sales revenue of approximately RMB 1.131 billion, up 28% from the same period last year.
Among them, Uremic Clearance Granules, with its exclusive variety status, over 30 years of market validation, evidence-based medical research and systems biology research, definite efficacy and numerous qualifications, continues to maintain its leading position in the oral modern Chinese patent medicine category for kidney diseases under the backdrop of centralized procurement expansion.
On January 23 this year, the Guangdong Drug Trading Center issued the "Notice on Publicizing the Proposed Winning Results of Centralized Volume-Based Procurement of Chinese Patent Medicines such as Golden Lotus Capsules in Guangdong Alliance." Against the backdrop of average drug price reductions of 51.51% and maximum reductions of 99.50% in this centralized procurement, CONSUN PHARMA's Uremic Clearance Granules (sugar-free) renewed at RMB 3.0654 per bag without price reduction, demonstrating its strong pricing power as an exclusive and essential product. On the other hand, it also reflects that Uremic Clearance Granules, as a first-line CKD treatment drug with low daily usage costs, has good pharmacoeconomic value.
Given the current large unmet treatment needs for CKD, combined with increased defined daily doses (DDDs) after centralized procurement, the logic for continued business growth of Uremic Clearance Granules, which renewed without price reduction, remains sound.
As another exclusive Chinese patent medicine in nephrology, Yishen Huashi Granules was approved as a Class II protected Chinese medicine variety in April this year under the "Regulations on Protection of Chinese Medicine Varieties," expected to become another major variety following Uremic Clearance Granules.
Notably, CONSUN PHARMA is continuously integrating global top-tier think tank resources in related fields, accelerating innovative R&D and product layout covering the full lifecycle management of kidney diseases through a model combining independent innovation R&D and external cooperation. The company's current nephrology products and R&D pipeline have achieved full CKD coverage, simultaneously deploying therapeutic drugs for related diseases that induce CKD (such as DKD, podocyte injury-related nephropathy), as well as reserving drugs for treating related complications during dialysis, such as Roxadustat (treating renal anemia) approved for listing on January 13 this year, and Lanthanum Carbonate Chewable Tablets (treating hyperphosphatemia) already submitted for CDE review.
Furthermore, on March 25 this year, internationally renowned kidney disease expert Jonathan Barratt was appointed as scientific advisor to CONSUN PHARMA, providing academic support and strategic guidance for new drug development in the kidney disease field. This marks an important breakthrough in CONSUN PHARMA's global layout in the kidney disease field, demonstrating the company's ambition to deeply cultivate nephrology and build a nephrology flagship.
While the nephrology segment grows steadily, CONSUN PHARMA is also accelerating deployment in other segments with significant results, continuously optimizing the company's revenue structure. Taking the maternal and pediatric product line as an example, the company focused on building academic brands and strengthening academic promotion during the reporting period, conducting over 100 large-scale academic conferences in the first half of this year. While increasing customer coverage, this drove maternal and pediatric drug sales revenue to RMB 172 million, up approximately 17.5% year-on-year.
Currently, the company's maternal and pediatric product line has formed a coordinated promotion strategy for Yuanlikanag®, Hemostatic Capsules, and Erythromycin Ethylsuccinate Suspension. Among them, Yuanlikanag® as the only oral iron supplement entering both the National Essential Drug List and medical insurance catalog, continues to consolidate its competitive advantage in the IDA prevention and treatment track for children and pregnant women, with steadily increasing market share.
In addition to continuously promoting in-depth development of nephrology and maternal and pediatric product lines, the company's performance in imaging and Yulin divisions was equally impressive in the first half of this year. In the imaging product line field, the company's medical imaging contrast agent sales revenue was approximately RMB 94.773 million, up 22.0% year-on-year; while the company's Yulin Pharmaceutical Division achieved sales revenue of approximately RMB 187 million during the reporting period, up approximately 16.5% year-on-year.
While continuously consolidating its foundation in Chinese patent medicines, CONSUN PHARMA is also accelerating rapid growth in innovative drugs as a strategic business. Currently, the company's pipeline is distributed across Chinese medicines and chemical drugs, covering generic drugs and innovative drugs, with priority deployment in key segments such as nephrology and imaging. The company currently focuses on nephrology and contrast agent fields, expanding 13 products under research.
**Summary**
From a macro perspective, according to Goldman Sachs' latest macro judgment released in August, market expectations for Federal Reserve rate cuts in September are heating up, potentially attracting more global capital flows into the Hong Kong pharmaceutical sector, which is undergoing valuation revision. Recent domestic pharmaceutical policy updates have released signals of payment system optimization, which may further release the commercialization potential of high-quality pharmaceutical companies. Under multiple positive catalysts, this round of Hong Kong pharmaceutical valuation repair will inevitably be a highly certain long-term process.
Returning to CONSUN PHARMA, from this interim report, the company has returned to high-speed growth of over 20% in revenue and net profit amid continued performance differentiation in the TCM industry, confirming the company's leading advantages in its core nephrology field. With the comprehensive deployment of the "1+6" multi-specialty strategy, we believe that future solid fundamental performance and innovation transformation benefits will continue to be reflected in the company's financial reports.
Additionally, as a high-quality value target in the Hong Kong TCM sector, CONSUN PHARMA is also expected to continue gaining favor from southbound capital after successfully entering Stock Connect.